Vacation days: What about it? - Jan de Belastingman stays home.
Pfoe ... that was a bit of a bummer. Actually, I was supposed to leave right now for my tour of Bermuda, Jersey and the Cayman Islands. But unfortunately 'miss Rona' did not allow it and if she says so, I had better follow the rules. So no faraway vacations this year, I'll just stay home! The downside is that I still have a lot of vacation days... I work an average of 7 days a week for 24 hours a day, so that adds up nicely. But what should I do with my vacation days? Just take a few days off, pay them off or can I carry them over to next year? And more importantly what are the tax implications? Questions questions questions questions ... you can read the answers here!!!
What are legal vacation days?
First of all, it is important to distinguish between statutory and non-statutory vacation days. The government wants an employee to take a mandatory number of days off each year. They therefore came up with the statutory vacation days, which stipulates that you are entitled to 4 times the number of hours you work per week. If you are toiling 25 hours a week then you are entitled to 100 hours of vacation each year. Gives you the opportunity to spend 4 weeks of paid shining on the Copacabana every year, or somewhere else of course.... Should you not manage to use up these vacations, you will have some left over. It is not possible to pay them off, so you have to use them within 6 months of the end of the year. Is that not possible? Doesn't that work out? Bummer! Because they then simply disappear like snow in the sun. Vacations 2020 must be used before July 2021. There are exceptions to the 6-month rule if, for example, you are not allowed by your employer to take the vacation days. You can also set other conditions by mutual agreement in writing with your employer. By the way, national holidays do not fall under the legal vacation days. So legally, you don't have to get time off for the 11 official holidays that the Netherlands has. However, often this is regulated in your collective bargaining agreement and you simply get paid leave. Finally, there is one way to pay out your legal vacation days, though, which is in case of dismissal.
"Workers in Kuwait are entitled to the most days of paid leave in the world, a whopping 43 days!"
What about above-legal vacation days?
In addition to legal vacation days, there are also above-legal vacation days. These vacations are not, as the name might suggest, above the law because nothing is above the law (except treaties, of course). These are vacations that the employer is not required to give but does. For the exact rules that apply to you, you should look in your CAO or contract. On average, the Dutch have 25.6 days of vacation, so this is the total of statutory and non-statutory vacation days. In the example above, if you work 25 hours per week, you are entitled to 20 legal vacation days and you will receive 5.6 extra-legal vacation days on top of that. For the above-legal vacation days, you must have used them within 5 years or they will expire. The big difference with the statutory vacation days, however, is that you can have non-statutory vacation days paid out. Note! Your employer is not obliged to pay this out, it is possible that your contract deviates from this arrangement. So always discuss your choice carefully with your employer and check your contract!
"Employees in the United States have the fewest legal days off, namely 0! This must be arranged between the employer and employee and often amounts to 15 days."
Paying out vacation days - tax implications.
Should you have decided to pay out vacation days after proper consultation, there are tax implications. A special rate applies to one-time payments such as vacation days, bonuses, overtime hours, thirteenth month and vacation pay. Many people think this makes you pay more tax on your lump sum payment, but nothing could be further from the truth! It is indeed true that initially a higher percentage is withheld from your benefit than you may be used to. This is because the employer uses the highest possible rate just to be sure, otherwise you may have to pay more tax later. It is important to realize that when you file your income tax return, this rate is adjusted back to the legitimate rate.
So, in answer to the question, "vacation days: what about that?" For statutory vacation days, the rule is: use up within 6 months of the end of the year. For above-legal vacation days, I would say two things: should you be able to put that extra penny to good use: "Kaching," pay out. You don't pay more tax than on your normal income. Are you more of the motto: "Don't save pennies, but moments." Also good! You have 5 years to spend those vacation days on those beautiful moments.